April 3 (Bloomberg) -- Corn, the worst-performing commodity during the past month, is in a bear market that may persist as U.S. farmers prepare to plant their biggest crop since World War II, according to Barclays Capital.

Corn fell 2.4 percent to $3.4625 a bushel for May delivery on the Chicago Board of Trade, down 23 percent from a 10-year high of $4.5025 on Feb. 26. A decline of 20 percent traditionally marks a so-called bear market.

``There's no other way to describe it,'' said Philip Roberts, a technical analyst at Barclays Capital in London, who uses price charts to predict where markets are heading.

Corn had soared 81 percent in 2006 as global demand for ethanol, animal feed and sweeteners exceeded production for the sixth time in seven years, eroding inventories. The jump in prices prompted U.S. farmers, the world's biggest producers and exporters of corn, to prepare a 15 percent increase in planting this year.

In a survey released March 30, farmers told the U.S. Department of Agriculture that they plan to plant 90.5 million acres with corn, up from 78.327 million in 2006 and topping the 12 percent jump estimated by analysts. If planted as planned in the next two months, the acreage would be the most since 1944.

``Assuming normal weather, the survey certainly changes the outlook for corn,'' said Dan Cekander, a senior grain analyst for Fimat USA in Chicago, who forecasts prices will drop to $3 a bushel by December. ``Now it takes a weather problem. Otherwise, corn is going down.''

Increased Sales

Corn has dropped 13 percent over the past three sessions, reaching a five-month low.

Commodity funds including those managed by John Henry & Co. in Boca Raton, Florida, increased sales of corn futures when prices fell below the 50-day low of $3.845 on March 28, said Dan Chesler, an independent analyst at Charttricks.com in Wellington, Florida, who studies historical price patterns.

Open interest in corn futures has declined 6.9 percent from a record 1.546 million contracts on Feb. 26 as signs of increased seed and fertilizer sales provide early evidence that U.S. farmers would plant the largest crop since World War II.

Commodity trading advisers and hedge funds increased short positions, or bets prices will fall, by 26 percent to 87,171 contracts as of March 27 and reduced record long positions by 17 percent to 386,886 contracts, government data show.

`Nasty Sell-Off'

``It's a very nasty sell-off that does not appear to be over,'' Chesler said, citing the increase in speculative short positions as prices fell from the high in February. Any rallies may prompt sales by speculators and investors eager to exit their money-losing long positions, Chesler said.

July corn futures yesterday opened 17.5 cents below the low on March 30, creating a so-called downside gap on the daily, weekly and monthly charts, signaling a change in the fundamentals, Chesler said.

``Traders are not going to stick their necks out and start buying this market until after a rebound attempt,'' Chesler said.

Some analysts said corn may rebound. Prices may rally once reaching between $3.40 and $3.50, above the commodity's average of $2.37 so far this decade, said Philip Roth, chief technical market analyst at Miller Tabak & Co. in New York.

``It's still a strong, cyclical uptrend,'' Roth said. ``It's premature to say you've reached support, but it's starting to smell like it. This is a knee-jerk reaction to the crop report. We'll complete this shakeout and scare and adjust. This is only a partial retrenchment of a bull move.''

Finding Support

Roberts, the Barclays analyst, said that if corn doesn't resume its climb soon, prices may tumble.

``If this is a correcting move, then I would expect to find support around $3.30, if we slide through that history suggests we're headed all the way back down,'' Roberts said. Corn traded as low as $2.05 on Jan. 19, 2006.

Paul Horsnell, head of commodities research at Barclays in London, had said on March 28 that corn will advance this year on stronger U.S. demand for ethanol and higher Chinese consumption. He forecast prices would stay around $4 or above for the rest of the year.

Corn production has risen 14 percent in the past seven years while demand is up 21 percent. Corn is the biggest U.S. crop, valued at a record $33.8 billion in 2006.

China's Harvest

Farmers outside of the U.S. also are planning to plant more.

Global cereal production may climb to a record this year because of increased demand for ethanol, the United Nations Food and Agriculture Organization said today. Output may gain 4.3 percent to 2.01 billion tons in 2007, the FAO said.

China's corn production, second only to that of the U.S., will rise 1.4 percent to 146 million tons this year on record plantings of 27.4 million hectares, the China National Grain and Oils Information Center said on March 7.

To contact the reporters on this story: Tom Cahill in London at tcahill@bloomberg.net; Marianne Stigset in London at mstigset@bloomberg.net.

Last Updated: April 3, 2007 15:23 EDT